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By Kindra Gordon

Ag economist David Kohl, a professor emeritus from the University of Virginia, has amassed a wealth of knowledge – and opinions – during his more than four decade career. Among them, he shares:

I used to think working capital is king, but a lady once told me the queen on the chess board is the most important. If you give up the queen, you give up strategic moves for the future. So now I say working capital is queen; equity is king; and profits and cash flow are the kingdom.

He also advises producers, “Be aware the world doesn’t revolve around the U.S. Ag producers must monitor weather, markets and trade issues around the globe and their imminent impact on American ag.”

Looking ahead, Kohl says, “I’m optimistic for young farmers because they are multi-enterprise. To survive in the future, you will need business IQ, adaptability and multi-revenue streams.”

Additional opinions

Kohl is straightforward and offers these additional comments:

• Our current healthcare system [and its high cost] is killing farms and ranches and small businesses.

• Strive for modest family living, which is $50,000 to $70,000 annually. Economists call it the “Corvette Rule.” Because through history, family living cost have generally followed the cost of a new corvette. So, if you have three families on a farm that is equal to three new corvettes.

• Only about 40% of transitions are successful. One of the biggest mistakes is treating all children equal financially. If you try to treat them all equally today - and don’t account for the one on the farm – you may as well kiss your farm and ranch goodbye.

• Regarding farm transitions, for perspective President John F. Kennedy was replaced in 10 minutes.

• The marketplace is splintering. Think beer, and now craft beer. It’s going to happen in beef – everything. 

• Of the oil and energy economies, this sector is important to us because 80% of ag expenses are energy related. 

• Because of the terrorist attacks on Sept. 11, the U.S. said we’d be energy independent in 25 years, and we did it in 10 years. We adapted.

• My generation was not going to pay income tax. But it’s not all bad. Few businesses go broke paying income tax.

• Have four years of living expense in cash, so you don’t have to sell ag assets in a down market.

Find ways to cope

During recessionary cycles in the ag economy, Kohl encourages producers and their families to find ways to stay positive in the down cycle. He acknowledges, “It’s tough,” but adds that a network of positive, supportive people can help. He also cautions, “Be careful; the wrong people can drag you and your self-worth down.”

Kohl advocates finding an individual from the older generation to be a mentor who will share wisdom. He says, “Listen to what they’ve gone through. That perspective is important.”

Likewise, Kohl suggests continuing to invest in your self – via education and development opportunities, as well as physical and mental health. He says, “Go for walks, exercise, read a book. Do something positive and uplifting, and take time to hear the silence.”

Additionally, Kohl says, “Find ways to be servient. Every one of us can give back.”

Thinking small may also be beneficial. Kohl explains, “Sweat the small stuff and position for small accomplishments. Success is doing 1,000 little things one percent better. Life is not about a quick fix.”